A Good Year in Review
By Ted Abernathy, policy advisor to the North Carolina Chamber Foundation
Fast Facts
• North Carolina’s recent annual job growth (1.9%) outpacing the national average
• Fastest job growth in Construction, and Professional and Business Services
• Manufacturing growth, despite losses at the national level
• Both North Carolina’s business rankings and economic performance remained solid
No one will remember 2016 as uneventful. Both North Carolina and national politics dominated our news and a slowing global economy and a strengthening dollar impacted the country’s economy. Yet progress continued for the North Carolina economy. Four years ago, the state’s unemployment rate was at 9 percent. During the summer of 2016 it was consistently below 5 percent. Over the past twelve months, even as the labor force has added over 100,000 people, the number of unemployed has been reduced by over 25,000.
North Carolina has had greater employment growth than the country and the aggregated southern states. North Carolina’s growth rate (1.9%) still lags South Carolina’s (2.2%) and Georgia’s (2.3%), but is stronger than Virginia’s (1.0%) the same as Tennessee’s (1.9%).
North Carolina’s percentage employment growth has remained consistently better than the national average for the past few years.
Just like last year, North Carolina’s job growth varied greatly within sectors. In several sectors, construction, manufacturing, professional and business services and trade-transportation-utilities, the state’s economy performed better than the national economy. In financial services, education and health, and leisure and hospitality, North Carolina employment grew at a slower rate.
The three factors we feel are most important to gauge economic performance are job growth, wage growth, and growth in the gross domestic product. North Carolina’s ranking among the states (and the District of Columbia) continues to improve.
Implementation of the North Carolina Chamber Foundation’s North Carolina Vision 2030 continues to be forward-thinking, consistently focusing on economic development strategies to grow the economy and create good jobs. In the first few years there has been a focus on business climate and the results have been impactful. The tax climate has moved up the rankings from 44th just a couple of years ago, to 11th in 2017.
2016 & 2017 State Business Tax Climate Index Rankings
The Tax Foundation
Overall Rank 2016 2017
North Carolina 15th 11th
Virginia 30th 33rd
South Carolina 36th 37th
Tennessee 16th 13th
Georgia 39th 39th
Again, this year, Forbes Best States for Business, CNBC’s Top States for Business and Chief Executive’s Best States for Business rank North Carolina among the ten best states. In fact, this year all ranked North Carolina in the top 5.
Despite all the good news there is still much work to do. Each year the North Carolina Chamber Foundation distributes the Competitiveness Redbook. The 2017 edition has just been released and while many of the rankings are a source of pride for the state, there are other areas that offer opportunities for improvement.
Three are worth highlighting. North Carolina ranks 35th in exports per capita. In a globalized economy, our state’s ability to export to growing economies worldwide is important for future growth. North Carolina’s 2015 exports were $2,990 per capita. The United States’ average was $4,466 and neighboring South Carolina was over $6,000. Almost 20% of our state’s GDP is from manufacturing. We need to commit to serve new markets.
The average annual manufacturing investment in machinery and equipment per employee in North Carolina was $10,896. North Carolina ranks 24th among states and trails many of our neighboring states. We know that manufacturers need to continue to automate to stay competitive. Investments are important to our state’s manufacturing health in the next decade. Our production workers are ranked as the 10th best in productivity, so new investments should provide a profitable return.
While North Carolina continues to enjoy a top 10 ranking for academic research and development per capita, (currently ranked 7th best) we continue to lag in industrial R&D. By focusing on attracting our existing industries’ research divisions we should be able to improve from our current ranking of 17th.
As we move into 2017, most economists expect the country to continue the steady employment growth that we have enjoyed for the past six years.
As we turn the page on 2016, North Carolina Vision 2030 continues to provide a pathway to long-term competitiveness for the state. Our next Charticle will focus on the subject that every publication calls the most important issue – the availability of a skilled workforce.